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Analyst Predicts Bleak Future for Traditional Media

Analyst Todd Juenger of Sanford C. Bernstein paints a bleak picture of the future of traditional media in a new report that likens the effect Netflix will have on TV to how Amazon’s technology disrupted the retail industry.

“Our view is that old media is indeed the next retail – but media's demise will be slower because pay-tv is a subscription model whereas retail is a transaction model,” Juenger said in a report published Thursday.

From a financial point of view, Juenger notes that cable TV network margins have dropped from a peak of 49% to 44% now, and says that when margins hit 40%, earnings go from growth to decline.

The slower decay of the media business might give those companies more time to reinvent themselves, but Juenger doesn’t see any way they can earn the kinds of returns cable got in its heyday.

“And it won’t be long before an increasing number of investors begin thinking of TV network companies… as another sector that is largely ‘un-investable’—at least until valuations come down and yields come way up,” he said.

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.